OUE Hospitality Trust's Mandarin Gallery (Photo: REITsWeek)OUE Hospitality Trust's Mandarin Gallery (Photo: REITsWeek)

Singapore-listed OUE Hospitality Trust announced on 6 May that it has achieved a distribution per stapled security (DPS) of 1.10 Singapore cents for its 1Q 2016, a fall of 31.7% as compared to the 1.61 cents paid in 1Q 2015.

Excluding the effects from the rights issue in April 2016, the DPS would have been 1.47 cents, still a fall of some 8.7% year-on-year.

Distributable income for the period slipped by 7.9% to SGD19.7 million. However gross revenue and net property income (NPI) for the period came in at SGD30.1 million and SGD26.3 million, 2.8% and 2.2% higher respectively than the corresponding period in 2015.

The trust has attributed the higher revenue and NPI the higher contribution from Crowne Plaza Changi Airport which was acquired in January 2015 and better operating performance at Mandarin Orchard Singapore.

However retail revenue for the period was SGD1.5 million lower than 1Q 2015. “This is mainly due to landlord fit out periods for incoming tenants and lower average occupancy rate”, said Chong Kee Hiong, CEO of the trust’s REIT component’s manager, adding that Mandarin Gallery’s average occupancy was about 83%.

Mandarin Gallery’s weighted average lease expiry (WALE) by gross rent and net lettable area (NLA) for the quarter was at 4.5 years and 3.0 years respectively.

OUE Hospitality Trust said in its statement that it recognises that the retail scene has been challenging, and as such has embarked on a number of marketing strategies to help drive tenants sales, such as “Silent Night”, Singapore’s first-ever silent yoga experience.

However it has warned that the quarters ahead will remain uncertain. “Against the backdrop of a subdued global and local economy, the tourism industry continues to face headwinds in the near term as consumers and corporates are likely to be conservative in their travel expenditures”, said OUE Hospitality Trust.

“In addition, the hospitality sector will remain competitive with the expected supply of new hotel rooms”, it added.

Units of OUE Hospitality Trust finished its trading day on the Singapore Exchange about 0.7% lower from its previous close to end at SGD0.675.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.